Indian Economy and Policy

What is/are the advantage/s that diversified conglomerates have? (a) They never suffer from paucity of resources, financial or human. (b) They are better suited to tackling a risk - laden market situation. (c) Western multinationals can use them to gain access to difficult markets, thereby gaining them foreign exchange. (d) They can better market new products, based on brand value of existing ones.

Directions: Read the passage and answer the question that follows.

IN DECEMBER 1872 HMS Challenger sailed from Portsmouth to conduct the most ambitious survey of the oceans ever. During the ship’s four year journey the crew discovered over 4,000 unknown species and provided invaluable material for the raging debate about evolution. Business travellers in today’s emerging markets often feel a bit like the Challenger’s crew. They constantly come across what to Western eyes look like exotic corporate species and new, unfamiliar kinds of business which raise profound questions about the evolution of companies and business models.
Most emerging countries have a penchant for highly diversified conglomerates. India’s Tata Group, which accounts for almost 6% of the country’s GDP, has subsidiaries in car making, agricultural chemicals, hotels, telecommunications and consulting. Reliance Industries’ range sprawls from petrol products and clothes to fresh food. But such diversifi cation is not confined to giant organisations. China is full of small and medium - sized companies that have fingers in many pies, taking advantage of opportunities as they arise.
Many emerging countries also rely heavily on state owned enterprises. These organisations are peculiar hybrids that have never been seen before; the closest relatives are the European trading companies of the 16th - 19th centuries, such as Britain’s East India Company. They are neither old - fashioned nationalised companies run by the government and designed to control chunks of the national economy, nor are they classic private-sector companies that sink or swim. Instead they are amphibious creatures that flit between sea and land, borrowing money from governments at subsidised rates one moment, plunging into the global market the next.
China and Russia are the main exponents. Thousands of Chinese companies have convoluted ties to central or local government. Russia has created a large class of state companies that enjoy various legal privileges. But countries in Latin America and the Middle East are jumping onto the hybrid bandwagon.
Hybrid organisations are particularly prominent in the energy sector. The world’s 13 largest oil companies, as measured by reserves, are all controlled by governments, and three - quarters of the world’s crude oil reserves are in the hands of state - backed companies. Many of China’s best high - tech companies, such as China Telecom and Lenovo, are also state - backed. But such organisations are active in lots of other areas too. Like the developing world’s private giants, they are often diversified.
In their different ways both of these corporate forms are creative responses to their circumstances, much like the exotic ocean creatures that the Challenger’s crew dredged up from the depths. Diversified conglomerates can adapt to environments rife with political and financial risks. Tarun Khanna, of the Harvard Business School, argues that they are also good at dealing with shortages of vital resources such as capital and talent. The Tata Group can use capital from established businesses to support growth in new ones, and has the resources to attract and train the best people. It can also use its brand name to sell all sorts of products. Indians who have grown up enjoying Tata tea might be more inclined to buy the latest Tata electric car.
State owned companies also draw on long traditions. Authoritarian governments can use them to direct economic activity (and also to preserve their economic power). Local entrepreneurs can use them to seize business opportunities. And even Western multinationals can use them to gain access to difficult markets. Looked at one way, a huge organisation such as China Mobile is a throwback to an earlier era; looked at another way, it is an attempt by those in charge to embrace a more dynamic economy, an evolutionary change.
How are these companies likely to fare as they compete in a global marketplace? Most Westerners have little time for diversified conglomerates; they expect a “conglomerate discount” when they buy such shares on the stockmarket, and regard them as a primitive corporate form that tends to disappear as local stockmarkets improve and investors rather than companies get to do the diversifying. But the inefficiency of capital markets is only one of the reasons for diversification. Two of the others, talent shortages and brand-building, are likely to be around for a long time yet. Conglomerates may have an enduring advantage in attracting and training talent in rapidly growing markets, and in building brands in regions where brand recognition is low and potential consumers are numbered in their billions rather than millions. The Tata Group reckons that its brand is worth about 100 billion rupees ($2.2 billion).
The case for state - owned companies is less robust. Hybrid companies are inherently confused organisations: unclear whether they are responsible to the state or the marketplace, and buffeted by contradictory pressures. They are subject to political meddling, often called upon to save “strategic” jobs and regularly used to oil the state patronage machine. Outsiders often find it hard to know whether to treat them as a business or an arm of government. And the OECD says that state - owned enterprises have significantly lower levels of productivity than private firms. But the road to real privatisation will be a long one, and the recent financial meltdown has hardly made emerging - market governments more favourably disposed towards the Anglo - Saxon model.
It would be foolish for Western companies to dismiss these new corporate life forms as evolutionary dead ends, but there is little scope for emulating them. The same is not true of many of the business models that the emerging world has come up with. They are not only important innovations in their own right but have serious implications for the way Western companies run their affairs.
Three of them are particularly powerful. The first concerns rethinking economies of scale, which usually involves scaling up. Companies reduce unit costs by centralising their manufacturing and producing long runs of standardised items. But centralised production adds expensive layers of bureaucracy, and it is hard to make it work in emerging markets where populations are often widely scattered and distribution systems abysmal. The Boston Consulting Group notes that a growing number of entrepreneurs in the emerging world are replacing scaling up with scaling out, which means involving a wider range of people in the process of production and distribution, something that has been made much easier by mobile phones and the internet. The most successful examples of this are clinics on wheels, but there are plenty of others. Nutriset, a French manufacturer of fortified food for malnourished children, has outsourced production to local franchises in Africa. The company maintains quality control and the franchises are close enough to the children to make distribution quick and easy. Kenya’s Child and Family Wellness Shops offer shares in the company to the nurses who operate the clinics, which encourages them to serve more children and helps stem the brain drain from rural areas.
A second business model takes an equally contrarian approach to production. John Hagel and John Seely Brown, who run Deloitte’s Centre for Edge Innovation, argue that Western companies have spent the past century perfecting “push” models of production that allocate resources to areas of expected demand. But in emerging markets, particularly those where the Chinese have a strong influence, a very different “pull” model often prevails, designed to help companies mobilise resources when the need arises. Hong Kong’s Li & Fung or China’s Chingquing Lifan Group can use their huge supply chains to produce fashion items or motorcycles in response to demand. Taiwan’s Quanta and Compel can produce cheap computers and digital cameras for a fashion-conscious digital marketplace.
These pull models fundamentally change the nature of companies. Instead of fixed armies looking for opportunities, firms become loose networks that are forever reconfiguring themselves in response to a rapidly shifting landscape. Such models are not peculiar to emerging markets: Dell builds computers to its Western customers’ specifications, and Western management gurus have been advocating networks for decades. But according to Messrs Hagel and Seely Brown they are far more widespread in emerging countries.
The developing world’s most innovative business model may be the application of mass - production techniques to sophisticated services. This started with India’s outsourcing firms, which demonstrated that economies of scale and scope could be reaped from services that used to be highly fragmented and geographically rooted. These outsourcers are still expanding and moving upmarket. Indian consultancies are now challenging Western ones in complex services, not just dealing with customer complaints.
Emerging - market entrepreneurs want to apply these techniques beyond IT and the back office. For example, they see a huge market for legal services requiring a high level of expertise. Dr Shetty is only one of many Indians who are applying Henry Ford’s principles to health care. LifeSpring has reduced the cost of giving birth in a private hospital to $40 by looking after many more mothers. Aravind, the world’s biggest eye - hospital chain, performs some 200,000 eye operations a year. It takes the assembly - line principle literally: four operating tables are laid side by side and two doctors operate on adjacent tables. When the first operation is done, the second patient is already in place.

How is the ‘pull’ model different from the ‘push’ model?

Directions: Read the passage and answer the question that follows.

IN DECEMBER 1872 HMS Challenger sailed from Portsmouth to conduct the most ambitious survey of the oceans ever. During the ship’s four year journey the crew discovered over 4,000 unknown species and provided invaluable material for the raging debate about evolution. Business travellers in today’s emerging markets often feel a bit like the Challenger’s crew. They constantly come across what to Western eyes look like exotic corporate species and new, unfamiliar kinds of business which raise profound questions about the evolution of companies and business models.
Most emerging countries have a penchant for highly diversified conglomerates. India’s Tata Group, which accounts for almost 6% of the country’s GDP, has subsidiaries in car making, agricultural chemicals, hotels, telecommunications and consulting. Reliance Industries’ range sprawls from petrol products and clothes to fresh food. But such diversifi cation is not confined to giant organisations. China is full of small and medium - sized companies that have fingers in many pies, taking advantage of opportunities as they arise.
Many emerging countries also rely heavily on state owned enterprises. These organisations are peculiar hybrids that have never been seen before; the closest relatives are the European trading companies of the 16th - 19th centuries, such as Britain’s East India Company. They are neither old - fashioned nationalised companies run by the government and designed to control chunks of the national economy, nor are they classic private-sector companies that sink or swim. Instead they are amphibious creatures that flit between sea and land, borrowing money from governments at subsidised rates one moment, plunging into the global market the next.
China and Russia are the main exponents. Thousands of Chinese companies have convoluted ties to central or local government. Russia has created a large class of state companies that enjoy various legal privileges. But countries in Latin America and the Middle East are jumping onto the hybrid bandwagon.
Hybrid organisations are particularly prominent in the energy sector. The world’s 13 largest oil companies, as measured by reserves, are all controlled by governments, and three - quarters of the world’s crude oil reserves are in the hands of state - backed companies. Many of China’s best high - tech companies, such as China Telecom and Lenovo, are also state - backed. But such organisations are active in lots of other areas too. Like the developing world’s private giants, they are often diversified.
In their different ways both of these corporate forms are creative responses to their circumstances, much like the exotic ocean creatures that the Challenger’s crew dredged up from the depths. Diversified conglomerates can adapt to environments rife with political and financial risks. Tarun Khanna, of the Harvard Business School, argues that they are also good at dealing with shortages of vital resources such as capital and talent. The Tata Group can use capital from established businesses to support growth in new ones, and has the resources to attract and train the best people. It can also use its brand name to sell all sorts of products. Indians who have grown up enjoying Tata tea might be more inclined to buy the latest Tata electric car.
State owned companies also draw on long traditions. Authoritarian governments can use them to direct economic activity (and also to preserve their economic power). Local entrepreneurs can use them to seize business opportunities. And even Western multinationals can use them to gain access to difficult markets. Looked at one way, a huge organisation such as China Mobile is a throwback to an earlier era; looked at another way, it is an attempt by those in charge to embrace a more dynamic economy, an evolutionary change.
How are these companies likely to fare as they compete in a global marketplace? Most Westerners have little time for diversified conglomerates; they expect a “conglomerate discount” when they buy such shares on the stockmarket, and regard them as a primitive corporate form that tends to disappear as local stockmarkets improve and investors rather than companies get to do the diversifying. But the inefficiency of capital markets is only one of the reasons for diversification. Two of the others, talent shortages and brand-building, are likely to be around for a long time yet. Conglomerates may have an enduring advantage in attracting and training talent in rapidly growing markets, and in building brands in regions where brand recognition is low and potential consumers are numbered in their billions rather than millions. The Tata Group reckons that its brand is worth about 100 billion rupees ($2.2 billion).
The case for state - owned companies is less robust. Hybrid companies are inherently confused organisations: unclear whether they are responsible to the state or the marketplace, and buffeted by contradictory pressures. They are subject to political meddling, often called upon to save “strategic” jobs and regularly used to oil the state patronage machine. Outsiders often find it hard to know whether to treat them as a business or an arm of government. And the OECD says that state - owned enterprises have significantly lower levels of productivity than private firms. But the road to real privatisation will be a long one, and the recent financial meltdown has hardly made emerging - market governments more favourably disposed towards the Anglo - Saxon model.
It would be foolish for Western companies to dismiss these new corporate life forms as evolutionary dead ends, but there is little scope for emulating them. The same is not true of many of the business models that the emerging world has come up with. They are not only important innovations in their own right but have serious implications for the way Western companies run their affairs.
Three of them are particularly powerful. The first concerns rethinking economies of scale, which usually involves scaling up. Companies reduce unit costs by centralising their manufacturing and producing long runs of standardised items. But centralised production adds expensive layers of bureaucracy, and it is hard to make it work in emerging markets where populations are often widely scattered and distribution systems abysmal. The Boston Consulting Group notes that a growing number of entrepreneurs in the emerging world are replacing scaling up with scaling out, which means involving a wider range of people in the process of production and distribution, something that has been made much easier by mobile phones and the internet. The most successful examples of this are clinics on wheels, but there are plenty of others. Nutriset, a French manufacturer of fortified food for malnourished children, has outsourced production to local franchises in Africa. The company maintains quality control and the franchises are close enough to the children to make distribution quick and easy. Kenya’s Child and Family Wellness Shops offer shares in the company to the nurses who operate the clinics, which encourages them to serve more children and helps stem the brain drain from rural areas.
A second business model takes an equally contrarian approach to production. John Hagel and John Seely Brown, who run Deloitte’s Centre for Edge Innovation, argue that Western companies have spent the past century perfecting “push” models of production that allocate resources to areas of expected demand. But in emerging markets, particularly those where the Chinese have a strong influence, a very different “pull” model often prevails, designed to help companies mobilise resources when the need arises. Hong Kong’s Li & Fung or China’s Chingquing Lifan Group can use their huge supply chains to produce fashion items or motorcycles in response to demand. Taiwan’s Quanta and Compel can produce cheap computers and digital cameras for a fashion-conscious digital marketplace.
These pull models fundamentally change the nature of companies. Instead of fixed armies looking for opportunities, firms become loose networks that are forever reconfiguring themselves in response to a rapidly shifting landscape. Such models are not peculiar to emerging markets: Dell builds computers to its Western customers’ specifications, and Western management gurus have been advocating networks for decades. But according to Messrs Hagel and Seely Brown they are far more widespread in emerging countries.
The developing world’s most innovative business model may be the application of mass - production techniques to sophisticated services. This started with India’s outsourcing firms, which demonstrated that economies of scale and scope could be reaped from services that used to be highly fragmented and geographically rooted. These outsourcers are still expanding and moving upmarket. Indian consultancies are now challenging Western ones in complex services, not just dealing with customer complaints.
Emerging - market entrepreneurs want to apply these techniques beyond IT and the back office. For example, they see a huge market for legal services requiring a high level of expertise. Dr Shetty is only one of many Indians who are applying Henry Ford’s principles to health care. LifeSpring has reduced the cost of giving birth in a private hospital to $40 by looking after many more mothers. Aravind, the world’s biggest eye - hospital chain, performs some 200,000 eye operations a year. It takes the assembly - line principle literally: four operating tables are laid side by side and two doctors operate on adjacent tables. When the first operation is done, the second patient is already in place.

What are the underlying reasons, according to the author, for a tailor-made partnership between India and China?

(i) Both India and China are big consumers of natural reasons. (ii) Both can be complementary to each other visà-vis India in terms of software, as is China, in hardware. (iii) The Iran oil field deal seems to pave the way for more strategic alliances between the two countries. (iv) The price factor has also been dealt amicably by the two countries in the manufacturing scenario.

Directions: Read the passage and answer the question

With nearly 1.1 billion inhabitants, India is the second largest country on earth in population, and seventh largest in geographical area, over 1.1 million square miles. This is almost 1,000 people for every square mile of area nationwide—much denser than even China.

Since achieving independence from British rule in 1947, it has seen its share of conflict, struggle and setbacks. Although India still faces many challenges, it is now poised to reach a higher position on the world scene than at any previous time.

The Indian economy has grown an average of around 6% annually over the past decade and 8% per year over the past three years—among the fastest rates in the world. It boasts of an emerging middle class and increasing gross domestic product, exports, employment and foreign investment. This is complemented by a roaring stock market (index value up by a third in 2005 and by 200% since 2001), low external debt and large foreign exchange reserves. Recent visits from leaders and officials from the United States, France, Germany and Russia have spotlighted India’s rise. These wealthier nations see India as a trading partner with enormous potential.
Although it has not yet matched the financial performance of China—currently the fastest-growing economy in the world—according to some analysts, India shows even more long-term potential for rapid growth. Leaders from both nations have discussed the creation of a Chinese-Indian common market based on the European Union model. Although only an idea at present, if realised, it would be the largest economic system in the world, home for about 2.5 billion consumers—almost 40% of the human race (or 3 of every 8 people on earth)!
India’s growth becomes more impressive in light of the fact that it is driven by a fraction of its population. Much of the nation remains a picture of rural poverty. Nearly all foreign investment in India goes to its six most urban states, with 22 other less developed states virtually ignored. This gap between city and country is keenly felt in places such as Gurgaon, a suburb of the Indian capital New Delhi: “In a land still plagued by deep poverty and backwardness, Gurgaon has become a renowned home of international call centres, business-processing operations, and information technology firms. There are gleaming, glass-paned high-tech towers, condominium blocks, multiplexes, and shopping malls, where Indians dine at Ruby Tuesday, browse for Samsung electronics, or kick the tires at a Toyota, Ford, or Chevy dealer. If one overlooks the dusty pockets of poverty nearby, a few water buffaloes picking at garbage near shanty towns, the look is more Southern California office park than the India of yore”.
Despite the problems seen in India’s underdeveloped countryside—for example, massive unmet infrastructure needs; more illiterate citizens than any other single nation—there are several areas in which the nation excels. These particularly specialised talents have allowed a tiny percentage of the populace—perhaps less than 1%—to spearhead its move toward a higher standing in the world order.
India’s economy is divided between agriculture (which accounts for a quarter of the gross national product), manufacturing (constituting another quarter) and the high-tech service sector, which now makes up fully half of the gross national product. Striving to become a “knowledge superpower,” it hopes to skip the intermediate step of industrial development that has preceded other nations’ march into the Information Age.
Scientific and information technology companies from around the world are opening research and development labs in India—more than 100 in the past five years. One mainstay of the new economy is software development, with ever more global firms outsourcing to India the time intensive work of programming. Businesses worldwide also rely on the country for customer service—phone calls from around the world are directed to call centres in Indian cities such as Bangalore. Other developing markets include pharmaceutical and biotechnology research. Currently, the majority of top American companies send some of their IT work to India, and there is little evidence of a slowdown in this trend.
The business world is also looking in India’s direction. Graduates of the nation’s business programs are in high demand among multinational corporations, with each graduating class commanding a higher average salary than the one before. Those who complete MBA degrees at schools such as the Indian Institute of Management can now expect starting salaries ranging from $75,000 (USD) at Indian firms to over $200,000 outside the country. This is comparable to graduates of top American business schools such as Harvard, Stanford and Dartmouth—testimony to the market value of Indian talent in this area of study. As its clout has grown, India has placed a high priority on improving its military capabilities as well. New Delhi has not joined 187 other nations in signing the Nuclear Nonproliferation Treaty (NPT), and appeared on the world’s radar screen as a nuclear-armed nation in May 1998, with the detonation of five warheads in the desert near the border of Pakistan. This disturbed many governments around the globe, naturally including that of Pakistan, which responded with nuclear tests of its own.
This stand-off was the turning point that began India’s pursuit of a full-fledged nuclear weapons program. According toThe Bulletin of the Atomic Scientists, additional nuclear missile tests occurred in the summer of 2004; since then, the Indian Defense Ministry has earmarked $2 billion annually to build 300 to 400 weapons over the next 5 to 7 years.
India maintains a “no first strike” nuclear policy, and asserts that it only seeks enough nuclear weaponry to effectively deter aggressors. The U.S. President George W. Bush, during a March 2006 visit with the Indian Prime Minister Manmohan Singh, announced cooperation between the two countries on civilian nuclear programs and had previously called India a “responsible” nuclear nation (Der Spiegel). These measures drew an American diplomatic line between India and other nations that have nixed participation in the NPT, such as North Korea and Iran. Whatever its nuclear aspirations, the country has a long military shopping list. Last year, it announced plans to build the first aircraft carrier ever put to sea by a developing nation, and to lease two nuclear submarines from Russia. America has openly discussed the sale of naval vessels, combat aircraft, patrol aircraft and helicopters to India. One former U.S. ambassador to India opined, “Of course, we should sell advanced weaponry to India. The millionman Indian army actually fights, unlike the post-modern militaries of many of our European allies”. Many have compared India’s pattern of growth to its neighbour, China. The countries have much in common— physical borders, immense populations, similar challenges, ancient civilisations and quickly-rising economies. India also measures itself against China, coveting its economic power and international standing, including its permanent seat on the United Nations Security Council.
Though a degree of tension does remain between the two nations, with lingering memories of the brief 1962 war in which China soundly defeated India, the relationship between these two Asian giants is warming up. Trade between them is now increasing at a vigorous pace, and diplomatic relations are at a post-1962 highpoint. Chinese Prime Minister WenJiabao, during a recent visit to New Delhi, hailed cooperation between the two nations as the driving force of a new “Asian Century.” Indian Prime Minister Singh spoke of the potential for India and China to rearrange the world order by working together. Many have pointed out that their economic strengths seem to be tailor-made for a partnership. India seeks to be a major player in the computer software world in the same way that China is in the area of hardware. Cooperation between Beijing and New Delhi could prove a dominant force in the information technology market.
Both nations have a voracious appetite for natural resources, and a recent energy deal neatly symbolized the new Sino-Indian dynamic: India acquired a 20% share in the development of the largest onshore oil field in Iran. The venture happens to be operated and 50% owned by Sinopec—China’s state-run oil company.

However, India could seek to undercut China’s manufacturing prices (as China did with many Southeast Asian countries in the 1990s). But it is more likely to pursue a different segment of the world market by producing higherquality goods, as well as entirely different products.

Time will tell exactly how the relationship will mix competition and cooperation. These two nations both aspire to “first-world” status—and economic gains could be the incentive for a more tightly allied Asia.

With its newfound power, India faces a dilemma: Should it ultimately pursue closer ties with Western nations or with other Asian countries?

After India gained independence, its first Prime Minister spoke of an Asian renaissance, envisioning a tightly bound continent changing the post-World War II landscape. Though premature at the time, the idea is now more feasible than any time since the Cold War era. Along with the improving relations with China, India is also friendly with Russia and Japan. And, as of 2004, the value of India’s trade with other Asian nations surpassed that of exchange with the United States and Western Europe put together.
But the United States—after courting India’s arch-rival Pakistan as an ally in the war on terror after the September 11 attacks—is now distancing itself somewhat from the current Islamabad regime led by Pakistani President Pervez Musharraf, focusing on India instead. India’s common ground with the U.S. includes liberal democratic government, capitalism and, among the more educated urban residents, the English language.
       However, America’s courting of India is viewed by some as a way to limit and contain Chinese influence in Asia. Some Indians resent this perception of their nation as a pawn of the U.S. Though they appreciate the American lifestyle and culture, much of the Indian population still sees this lone superpower as a bully. While it may be able to dance with both partners alternately for a while, India will eventually be forced to choose. Which way will this nation turn? We need not merely guess where world events will ultimately lead. While many of the details remain to be seen, the overall framework of the future has been recorded in advance in one book—The Holy Bible.
       In nations such as India, the size of population alone pulls them toward superpower status. Bible prophecy describes global power blocs—superpowers, or groups of superpowers—that will be prominent at the end of the age, shortly before Jesus Christ returns. These powers will be based in the north (Europe), the south (the Arab world), and the “kings of the East”—a group of Asian nations that will band together, eventually fielding a standing army of two hundred million!
The nations of the West, including the United States, are headed for hard times as a result of their national and personal sins against the God that inspired The Bible. He reveals that they will be forsaken by their allies, called “lovers” in Scripture:
“And when you are spoiled, what will you do? Though you clothe yourself with crimson, though you deck yourself with ornaments of gold, though you rend your face with painting, in vain shall you make yourself fair; your lovers will despise you, they will seek your life…All your lovers have forgotten you; they seek you not; for I have wounded you with the wound of an enemy, with the chastisement of a cruel one, for the multitude of your iniquity; because your sins were increased”. India is today one of these “lovers,” but one that will soon prove to be something very different. So will other nations that Western countries now consider to be allies. Keep watching India’s growth toward superpower status—just one part of the inevitable rise of Asia!

The public sector was given a dominant role after the independence. Which of the following statements about the role of public sector in the Indian economy is/are correct ?

a. Only eight industries are reserved for the public sector since 2001. b. Disinvestment of the public sector companies was done by bringing down the government equity in all the non strategic PSU's. c. National Renewal Fund was set up for the reconstruction of the sick PSU's.

That Mauritius is tipped as the first tiger of the Indian Ocean and Africa suggests it

Directions: Read the following passage and answer the questions.

March 12, 1992 Mauritius becomes a republic and is tipped as the first tiger of the Indian Ocean and Africa. It has always solved its problems on its own. Population density is still high at 1500 persons per square mile but the population growth rate has been contained at less than two percent per year in the 1990s. The structure of the economy has undergone substantial transformation. Diversification away from sugar (but not at its expense) has been achieved. Textile and garment and tourism are other leading sectors today. The major challenge today is not finding jobs but finding enough skilled labour to maintain the competitiveness of the economy. The unemployment rate stands at less than three percent. The overall balance of payments is positive. Income per capita is Rs 25000, placing Mauritius among the middle income group of countries. Mauritius is now poised to move to a higher development phase.